Our focus on business fundamentals has shortened our path to profitability, said SurfControl’s CEO, Steve Purdham. We’re well ahead of market expectations.
Specific third quarter highlights include:
An increase in deferred revenue to $17.6m, up from $4.1 million in 2000 (deferred revenue is billings to customers not yet recognized as revenue but guaranteed to be recognized in future periods).
Increase in filtering products organic revenues for 9 months ending February 2001 of 328%.
Expanded reseller network with indirect revenues for filtering products of 343% to $2.7m .
Significant contribution from UK, Europe and ROW, increasing to $2.6m for the quarter, equivalent to 25% of global filtering product revenue (Q3 2000: $0.1m).
EBITDA for the quarter (excluding the provision for tax on share options) was a loss of $1.6m (Q3 2000: $2.7m EBITDA loss); gross margins remained over 90%.
Overall revenues were up 200 percent to $27.3m (2000:$9.1m).
Sale of non-core terminal emulation division, MultiView.
Completion of the SurfControl Australia acquisition and rapid integration into group.
Continued development of email filtering products and technology for global launch during April 2001.
Heralding the escalation potential of the total content security market, industry analyst Frost & Sullivan forecasts a compound annual growth rate of 30.6 percent from 2000-2007. With our comprehensive suite of software programs for homes, schools and businesses, SurfControl is well positioned to be both the driver and beneficiary of this market space, said Purdham.
Other factors that contributed to SurfControl’s success include:
Ongoing Research and Development SurfControl’s ongoing investment in research and development paid off in positive product reviews of numerous cornerstone trade and consumer publications. Following the third quarter shipment of the latest versions of SuperScout for business and CyberPatrol for the home and education market. In addition, the company made significant improvements to its SuperScout SDK filtering engine, which enables software to operate on a broader spectrum of technology platforms.
Purdham acknowledged that much of the third quarter was spent maximizing the potential of an investment that is expected to generate dividends later this year. The investment, which is the next generation email filtering software called SuperScout Email Filter, gives SurfControl a considerable competitive advantage. By integrating the strengths of two Australian acquisitions – EmU’s email filtering technology and Lanvision’s sales and marketing capabilities – SurfControl is well positioned to further penetrate Australia and New Zealand, as well as dominate the content security market worldwide.
Expanding Corporate Customer Base SurfControl’s customer base continues to expand as there is an increase in the implementation of Internet filtering in our key markets. During the quarter, new additions to our corporate customer base included Apax Partners & Co, Cartier, the Defence Evaluation Research Agency, Monsoon, Polaroid (UK) Ltd., Samsung Electronic (UK) Ltd, the World Conservation Monitoring Centre, the Austrian Ministry for Finance, AOK (Allgemeine Ortskrankenkasse – one of the largest German health insurance schemes), the City of Melbourne, Duracell Inc., Shell Chemical Inc, E*Trade, Sega of America and GMAC Insurance. SurfControl now has 19 of the FTSE 100 and over 100 of the Fortune 500 as customers.
New Business Development During the third quarter, SurfControl has announced further strategic alliances with major corporations including Global Technology Associates Inc, Microsoft, Intel and SofaWare Technologies – a Check Point Software Technologies company. These alliances help to extend our market reach in the areas of firewalls, iTV, Internet appliances and broadband communications, as our products are offered as part of our partners’ services and IT solutions.
Existing Legislation There has been continued support for the use of Internet filtering at the government level following the decision by the US congress requiring mandatory Internet filtering in schools and public libraries receiving federal funds. As a leader in the field, the Company has been consulted on the implementation of Internet filtering in these environments and during the quarter, representatives from SurfControl testified in the US Congress as part of the US government’s consultation program on the future of Internet filtering. Outside of the US, both the EC and UK government are currently reviewing further legislative measures relating to the use of the Internet.
